South Korea

Dirty laundry

World-bestriding Samsung faces a little local difficulty

CYNICS in South Korea, and there are many, expect the scandal now engulfing the country's biggest conglomerate, or chaebol, simply to fizzle out. Samsung stands accused of bribing politicians, bureaucrats and prosecutors to do its bidding. Samsung, whose businesses—from electronics to shipbuilding—produce revenues equivalent to one-fifth of South Korea's GDP, calls the allegations “ungrounded and untrue”. Whatever their basis in fact, this is an election year and the economy is, as ever, the voters' biggest concern. So many believe the investigations into the accusations will end with Samsung receiving a slap on the wrist, at worst.

Yet it may turn out differently. Samsung's accuser is no ordinary whistleblower. He was the group's senior legal officer, Kim Yong-chul, the first insider to make such allegations. At first only one newspaper, Hankyoreh, regarded as a provocative gadfly, dared print them. Many in South Korea believe the press coddles the chaebols because of their clout as advertisers.

Frustrated by the tepid response, Mr Kim turned to the Catholic Priests' Association for Justice (CPAJ). This 33-year-old group played a leading role in ending South Korea's military dictatorship in 1987. So when it held a news conference the big papers could not ignore it. Mr Kim said Samsung had more than 1,000 bank accounts, including some under his own name, which were used for bribery. And he said executives put pressure on witnesses and prosecutors during a trial about the legality of a sale of securities by Lee Kun-hee, Samsung's chairman, to his son, Lee Jay-yong, which enabled the younger Mr Lee to take control of the group's holding company.

Prosecutors have already launched one investigation. After a public outcry, another inquiry by a special independent prosecutor was announced. Lee Kun-hee has been banned from leaving the country. Song Ho-chang, of Lawyers for a Democratic Society, a group backing Mr Kim, believes South Korea has made much progress in reducing the collusion between business and politicians.

Others argue that bribery by leading business groups remains deeply rooted and that no president has had the courage to tackle it. The current president, Roh Moo-hyun, promised to break the power of the chaebols; he has done nothing. Many in South Korea believe the chaebols have to make their business dealings more transparent. Dynastic succession has to go, they say: we are not North Korea.

The whistleblower himself has sought sanctuary. Mr Kim is housed and fed by the CPAJ. Meanwhile a whispering campaign against him is making its way around Seoul. Father Kim In-kook of the CPAJ defends him: “He spent a lot of time thinking what he should do; and he has concluded that uncovering these actions by Samsung will benefit society.” But Father Kim declined to meet The Economist, saying his group had made a collective decision not to talk to foreign reporters about the Samsung allegations. “We don't want to air Korea's dirty laundry to the world,” he said. They have that, at least, in common with Samsung.